Mandatory input-use statement governs exemption set-off claims; absence of proof defeats refund entitlement under the notification.

An exemption notification providing set-off against duty paid on Item 68 inputs required proof linking the inputs received and used to the duty paid, so the admissible set-off could be determined. For the initial period, the absence of evidence showing receipt and utilisation of the inputs justified rejection of the claim. After the amending notification, furnishing a statement of the quantity of inputs used in manufacturing each unit of the finished goods became an express condition, and the refund claim for the later period also failed because that statement was not produced. The input-use statement was treated as mandatory for entitlement to refund or set-off.

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Issues: Whether refund or set-off of duty under the exemption notification could be granted without furnishing the prescribed statement showing the quantity of inputs used in the manufacture of the finished goods.

Analysis: The exemption operated as a set-off against duty already paid on Item 68 inputs used in the manufacture of the finished goods. Effective implementation of the notification required a correlation between the quantity of input used and the duty paid on such input, so that the admissible set-off could be ascertained. For the period covered by the original notification, the absence of proof of receipt and utilisation of the inputs justified rejection of the claim. After the amending notification, the requirement to furnish a statement showing the quantity of inputs used in the manufacture of every unit of the said goods became an express condition. In the absence of that statement, the refund claim for the later period also could not be allowed.

Conclusion: The condition of furnishing the input-use statement was treated as mandatory, and the refund claim was rightly rejected.

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